View Full Version : Brexit: Merkel profits from the EU breakup

18 May 2017, 11:08 AM

Almost a year ago the United Kingdom voted to leave the European Union, but even today passions over the matter in Europe have not waned. German Chancellor as well as its government and business put their own interests far ahead of common European interests, striving to drive wedges between London and the rest of Europe.

In late March 2017, Germany's Federal Minister of Finance and a close associate of Angela Merkel, Wolfgang Schäuble, said in his interview to the Financial Times that it is not in the interests of the EU countries to punish the UK for Brexit although they will not endanger the pan-European integration because of that. In April, the German Chancellor herself once again stated during the debate on Brexit in Bundestag that there could be no negotiations on further relations between Britain and the EU unless and until the amount of the compensation for the UK withdrawal from the Union was determined. Merkel made it clear that Brexit would entail severe costs for London. In fact, her statements have Britain and its European partners pitted against each other. Obviously, the Chancellor has got a compelling reason for this emphasis.

It is not European integration Mrs. Merkel is worried about; it is Germany's economy with its highly export-orientated industrial sector. Those two countries have close political and economic ties. The United Kingdom is the fifth largest trading partner of Germany. The total amounts of exports and imports between the two countries is over €127 billion. After the US and France, the United Kingdom is the third largest export market. More than 750 000 jobs in Germany are linked with trade between the two countries. German automakers, its chemical and pharmaceutical industries will meet with heavy losses if the UK market is lost. Another 2,500 companies have their affiliates in the United Kingdom. More than 400 000 Britons are working there. And above that, being the major financial center of the euro zone, London will be excluded from it. It is clear that as a result of Brexit Great Britain will face minimal losses. And just because of it, Merkel firmly rejects such 'charitable' UK withdrawal from the EU. In her effort to compensate for primarily German losses, the Chancellor is absolutely not in a hurry to discuss the post-Brexit future with other EU members, which causes concerns among them. For instance, the UK decision to leave the EU has already had a profound effect on Denmark, the country that is not only geographically and culturally close to the United Kingdom, but also strongly linked with it in the area of trade.

Following the lead of Britain, Denmark joined the European community in 1973. And throughout this time, both Denmark and its British neighbor have been the most skeptical members of the European Union, who also refused to use the Euro-currency.

The Brexit referendum has not just increased all-European skepticism, but led to the fact that Denmark, the Netherlands, Belgium, Luxembourg and a few other countries have agreed jointly to leave the EU following the example of Britain if Merkel would continue to pursue her policy of non-respect of EU members' rights. In this case, there can be no question of any financial compensation.

It is fair to say that some of those countries support social and economic integration within the EU. But of their special concern and skepticism is the fact that the EU, practically ruled by the German Chancellor alone now, is unable to secure the level of cooperation required for solving the EU problems. Economic crisis, rise in unemployment and poverty, as well as, migration crisis resulting from Merkel's policies of multiculturalism - all this leads to the EU breakup. When the United Kingdom decided on disintegration, it minimized all potential challenges that the European Union would have to face in the near future. And why would anyone blindly trust and come after Merkel and Germany as part of the EU? Why should they be economically dependent on Berlin's moods, erasing their national identities?

Merkel's policy is driving the EU to the situation where other countries may also leave the European Union in the coming years following the lead of Britain as they would rather develop an equal partnership with the United Kingdom or even join a new association under British authority than obey Berlin's wishes. Now the European Union is fully on track where it will be only Germany and Eastern European members whose maintenance will cost Merkel billions of euros.

Nevertheless, Merkel categorically refuses to cooperate more closely with other EU members and even does not try to discuss with them future prospects of the Euro-zone. First of all, she is focusing attention on German business that has agreed to fully support the Chancellor in the forthcoming elections this September, surely, in exchange for Merkel's assistance in making new economic arrangements with London, which will enable the German business to stay afloat after April 2019, that is, after the UK finally leaves the EU.

Merkel has met repeatedly with the head of German Chambers of Commerce and Industry (one of Germany's leading industry lobbying groups), Eric Schweitzer. After the meetings the business decided to support the Chancellor. And Schweitzer started to call upon the EU members and those businesses that are linked to Britain to take a tough line in Brexit negotiations with London. At the same time, the UK Prime Minister, Theresa May, has consistently expressed the readiness to pay compensation to the EU. But the total payments will hardly amount to £50 billion, as called for by Merkel. And the data presents a very clear result: if the original sum of compensation has covered expenses of not only Germany and its business, but also other EU members, then the sum, which is equivalent to even half of the amount initially requested, will be barely enough to support German businesses and help them to adapt to the post-Brexit time. Nonetheless, some British politicians, like Philip Hammond, are insisting on a total payment of over £3 billion in compensation, which according to Mrs. Merkel is negligible.

Two years of uneasy negotiations will precede the UK withdrawal from the European Union. As the negotiations move ahead, Merkel intends to damage relations between London and other EU members, betting on such inadequate financial compensation from Britain. Merkel's plan is so that in the end, the EU will get practically nothing from Britain while the German business will be welcome to have all the preferences. The forthcoming elections to Bundestag this autumn are the only real obstacle in the way of Angela Merkel. According to the leading political analysts, her main opponent, Martin Schulz, has a real chance to push the current Frau Chancellor out.